Are Mortgages Rates Really Lower? It Depends On What Day You Lock.

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Mr. Deeds: [Stepping into an elevator] So how's the elevator business treating you, Reuben?

Reuben: Oh, it has its ups and downs.

It's been a wild few months in the mortgage markets and a trying time for mortgage rate shoppers.

Making sure you get the absolute "lowest rate" has never been tougher.  Rates are up.  Then, rates are down.  Rates are up.  Then, rates are down.  Over the past 5 weeks, mortgage rates have carved out a 1.500 percent range.

• Mid-May : 30-year fixed rates were near 4.750 with 0 points
• Early-June : 30-year fixed rates were near 6.250 with 0 points
• Late-June : 30-year fixed rates were near 5.500 with 0 points
• Early-July : 30-year fixed rates were near 5.000 with 0 points
• Mid-July : 30-year fixed rates are near 5.375  with 0 points

It's been a stomach-dropping ride for people trying to time a market bottom before locking in a rate and it's all happening because traders can't seem to answer to the most important question on Wall Street right now:

Is the recession ending, or getting worse?

It would seem like a simple yes or no -- there's plenty of available data , after all -- but the data is conflicting.  As soon as we get cause for optimism from one sector of the economy, weak data presents itself somewhere else.

Furthermore, when it comes to predicting the future of the U.S. economy, not all data is created equal.  Unemployment statistics tend to lag, for example, whereas Retail Sales may be more immediate.

So, what's a home buyer or would-be refinancer to make of it all?

Well, first of all, it's important to recognize that markets are moving on momentum and fundamentals right now.  That's a dangerous combination because even the smallest market event could lead to a mortgage rate surge  The other side, of course, is that rates could fall on new news, but mortgage rates usually rise much faster than they fall.

There's an old adage: Mortgage rates take the elevator on the way up, but take the stairs on the way down.

Lately, we've even seen this IRL.  There have been days where rate are up by as much as half-percent as investor flee from the bond market, but when rates recover lower, they seem to be dropping just an eighth of a percent at a time.

Floating your mortgage rate is fine, but given the current market conditions, you may be playing with house money right now and this is as good a time as any to cash in your chips.  All it will take a series of strong earnings from the banks this week and some hotter-than-expected inflation data to push rates back near 6 percent again.

The world moves quickly and mortgage rates do, too.  If you're not already working with a loan officer and are looking for a specific mortgage rate before locking, you may want to participate in my Rate Watch program.  You pick your target interest rate and when it's available on the open market, I'll lock it for you.

Call or.  I'll take a full loan application from you to keep on file, ready for when rates fall.

Or, if you prefer watching rates from the sidelines, my Twitter timeline is http://twitter.com/mortgagereports.  I post several mortgage updates each day.